Introduction 1 About This Book 1 Foolish Assumptions 2 Icons Used in This Book 2 Beyond the Book 2 Where to Go from Here 3 Part 1: Getting Started with the SIE Exam 5 Chapter 1: Introducing the SIE (Securities Industry Essentials) Exam 7 What Is the SIE Exam, Anyway? 7 Profiling the SIE Exam-Taker 8 One''s Not Enough: Tackling the Corequisite Exams 8 Series 6: Investment Company and Variable Products Representative Exam 9 Series 7: General Securities Representative Exam 9 Series 22: DPP Representative Exam 9 Series 57: Securities Trader Exam 9 Series 79: Investment Banking Representative Exam 9 Series 82: Private Securities Offerings Representative Exam 10 Series 7 + Series 86 + Series 87: Research Analyst Exam 10 Series 99: Operations Professional Exam 10 Signing Up 10 Filling out an application to enroll 10 It''s a date! Scheduling your exam 11 Planning for special accommodations 11 Just in case: Canceling as an option 13 Taking a Peek at the Tested Topics 13 Understanding the Exam Format and Other Exam Details 14 Reviewing the exam basics 14 Practicing on ten additional trial questions 15 Mastering the computerized format and features 15 Viewing exhibits 16 Instant gratification: Receiving and evaluating your score 16 Chapter 2: Preparing for the SIE Exam 19 Courses and Training Materials: Determining the Best Way to Study 19 Back to school: Attending a prep course 19 Selecting prep material to study on your own 21 Managing Your Study Time Wisely 23 Blocking out some time to study 23 It''s a plan: Getting into a study routine 24 Give it a rest: Taking short breaks 24 Staying focused from day to day 25 Devoting time to practice tests 25 Avoiding study groups 26 Staying in shape 26 Exploring Study Strategies 26 Developing Solid Test-Taking Skills 27 Read the question carefully 27 Look for phrases that lead to the topic tested 27 Work with what you have 27 Don''t obsess; mark for review 28 Keep track of time 28 Master the process of elimination 29 Maintain your concentration 29 Think carefully before changing your answers 29 Use the scrap paper wisely 29 Knowing When You''re Ready 30 Chapter 3: Examining and Mastering Question Types 31 Familiarizing Yourself with Question Formats 31 Working with the straight shooters: The straightforward questions 32 Encountering quirky questions with qualifiers 33 Roman hell: Complex multiple-choice questions 34 Looking at exhibits: Diagram questions 36 Shredding the Questions: Tips and Tricks 37 Focusing on key information 37 Answer me this: Picking the correct answer 38 Don''t make the same mistake twice 40 Chapter 4: Surviving Test Day 41 Composing Yourself the Day Before 41 Making the Most of the Morning 43 Arriving on the Scene 43 Taking advantage of one last chance to cram 43 Signing in 43 Getting seated 44 Tackling the SIE 44 Revealing Your Results: Drumroll, Please 45 Part 2: Mastering Basic Security Investments 47 Chapter 5: Securities Underwriting: The Process and the Team Players 49 Bringing New Issues to the Market 49 Starting out: What the issuer does 49 Calling the roll: Introducing the team players 53 Getting the skinny on the issue and issuer: The prospectus 54 Counting the securities along the way 55 Getting Up to Speed on the Types of Securities Offerings 55 Reviewing Exemptions 56 Exempt securities 56 Exempt transactions 57 Testing Your Knowledge 59 Practice questions 59 Answers and explanations 62 Chapter 6: Equity Securities: Corporate Ownership 63 Beginning with the Basics: Common Stock 63 Understanding a stockholder''s voting rights 64 Categorizing shares corporations can sell 66 Establishing the par value of common stock 66 Considering corporate actions 67 Splitting common stock 68 Sharing corporate profits through dividends 69 Getting Preferential Treatment: Preferred Stock 71 Considering characteristics of preferred stock 71 Getting familiar with types of preferred stock 72 Securities with a Twist 74 Opening national borders: ADRs 74 Rights: The right to buy new shares at a discount 74 Warrants: The right to buy stock at a fixed price 75 Testing Your Knowledge 75 Practice questions 75 Answers and explanations 78 Chapter 7: Debt Securities: Corporate and U.S Government Loans 81 Tackling Bond Terms, Types, and Traits 81 Remembering bond terminology 82 Following bond issue and maturity schedules 83 Comparing secured and unsecured bonds 84 Making Basic Bond Price and Yield Calculations 85 Nominal yield (coupon rate) 86 Current yield 86 Yield to maturity (basis) 86 Yield to call 87 Yield to worst 87 Total return 87 Basis point 87 Determining the Best Investment: Comparing Bonds 88 Considering bond credit ratings 88 Contrasting callable and put bonds 89 Popping the top on convertible bonds 90 Exploring U.S Government Securities 91 Understanding the types of U.S government securities 91 Looking at agency securities 92 Playing It Safe: Short-Term Loans or Money Market Instruments 93 Testing Your Knowledge 94 Practice questions 94 Answers and explanations 97 Chapter 8: Municipal Bonds: Local Government Securities 99 General Obligation Bonds: Backing Bonds with Taxes 99 General characteristics of GOs 100 Analyzing GO bonds 100 Revenue Bonds: Raising Money for Utilities and Such 101 General characteristics of revenue bonds 102 Analyzing revenue bonds 102 The Primary Market: Bringing New Municipal Bonds to Market 103 Allocation of orders 104 Definitions for new issues 104 Examining Other Types of Municipal Bonds on the Test 105 Taxing BABs: Taxable Municipal Bonds 106 Municipal Notes: Securing Short-Term Financing 106 Taking a Closer Look at Municipal Fund Securities 107 Section 529 savings plans 107 ABLE accounts 108 LGIPs 108 Understanding the Taxes on Municipal Bonds 109 Comparing municipal and corporate bonds equally 109 Scot-free! Taking a look at triple tax-free municipal bonds 110 Following Municipal Bond Rules 110 Confirmations 110 Advertising and record keeping 111 Gifts 111 Commissions 112 Gathering Municipal Bond Info 112 The bond resolution (indenture) 112 Legal opinion 112 Official statement 113 "G" That''s a Whole Lot of Rules 113 Testing Your Knowledge 116 Practice questions 116 Answers and explanations 119 Part 3: Delving Deeper: Security Investments with a Twist 121 Chapter 9: Delivering Diversification with Packaged Securities 123 Looking at Investment Company Registration 123 Diversifying through Management Investment Companies 124 Comparing open- and closed-end funds 124 Keeping your customer''s investment objectives in mind 126 Dealing with discounts 128 Figuring the sales charge and public offering price of open-end funds 130 Considering Other Investment Company Options 132 Face-amount certificate companies 132 Unit investment trusts 132 Exchange-traded products 133 Investment company rules 17a-6 and 17a-7 134 Adding Annuities to a Portfolio 134 Looking at fixed annuities 134 Focusing on variable annuities 135 Putting money into (and receiving money from) annuities 135 Understanding the Investment Component of Variable Life Insurance Products 137 Testing Your Knowledge 137 Practice questions 138 Answers and explanations 141 Chapter 10: Working with Direct Participation Programs and REITs 143 Searching for Identity: What DPPs Are (And Aren''t) 144 The DPP Characters: General and Limited Partners 144 Pushing through Partnership Paperwork 145 Partnership agreement 145 Certificate of limited partnership 146 Subscription agreement 146 Passive Income and Losses: Looking at Taxes on Partnerships 146 Evaluating DPPs 147 Checking Out Types of Partnerships 147 Building on real-estate partnership info 147 Gearing up with equipment leasing 148 Strengthening your grasp on oil and gas 149 Reducing Real-estate Risk with REITs 150 Testing Your Knowledge 151 Practice questions 152 Answers and explanations 154 Chapter 11: Options: Understanding the Basics of Puts and Calls 155 Brushing Up on Option Basics 155 Reading an option 156 Looking at call options: The right to buy 157 Checking out put options: The right to sell 157 Getting your money back: Options in-, at-, or out-of-the-money 157 Paying the premium: The cost of an option 159 Incorporating Standard Option Math 160 Calls same: Buying or selling call options 161 Puts switch: Buying or selling put options 163 Trading options: Opening and closin.